Saatchi makes case for independents' comeback

"We are not driven by the need for moving up the league tables or hungry for world domination," Lord Maurice Saatchi, co-founder of M&C Saatchi, states flatly. On a recent visit to Hong Kong and Shanghai, Lord Saatchi, chief executive David Kershaw and executive chairman for Asia-Pacific Tom Dery, spoke to Media on M&C Saatchi's prospects and its expansion plans in the Asia-Pacific region. Now more than ever, Saatchi argues, there's a place for independent players like M&C on the global advertising stage, an area increasingly dominated by large holding companies that are able to offer clients a one-stop shop solution. "I think with clients you'll find there are increasingly narrower choices as conglomerates buy up the networks," Saatchi explains, adding that as networks fall, they inevitably lose their brand identity and characteristics. Kershaw, meanwhile, points to the recent development in Hong Kong, where Saatchi & Saatchi and Publicis combined their operations, and observes: "There's no true character and identity left and I think that makes it harder for clients to find an agency that can be seen around the world to have a strong point of view and consistent point of view. "We think there's a real opportunity to offer an independent global network where every office has a standard of excellence because in our view there's no network now that can offer that. And, the more they are gobbled up by the 'Pac Men' of advertising, the less they'll be able to do." Indeed, whether its discontent with the formalities, procedures and costs associated with large networks, or simply the demand for local solutions, a growing number of marketers appear to be eyeing independent companies, according to a recent R3/JP Morgan report. In the report, R3 principal Greg Paull declared that "independents are making a comeback", highlighting the number of smaller players currently participating in several large account reviews, including Charles Schwab, Kia Motor America, Cellular Telecommunications and Internet Association and JPMorgan Chase's media account. The likes of M&C Saatchi and Wieden & Kennedy -- "the Lilliputians"-- Paull argues, appear to be gaining market share, albeit slowly. However, he's doubtful that the smaller companies will ultimately dent the holding companies' bottom line, given that few medium size agencies remain after the '90s acquisition spree. "Nevertheless, if the trend continues, we believe that independents will begin to have a material impact. The view here is that the trend towards independents also reflects a measure of client discontent with the bureaucracy of large agencies as well as the holding company model in general," adds Paull. For M&C, getting its positioning right is particularly critical on account of Saatchis' aspirations to pitch against the 'big boys of advertising' for regional accounts. However, the chink in M&C's armour continues to be markets like India and South Korea and until recently Thailand, all of which have made it particularly difficult for the agency to gun for and manage region-wide or global business. M&C -- Saatchi stresses -- is battling to address the gaps in its Asia-Pacific network, which saw its best growth in the first half of this year, with revenue rising by 31 per cent to £10.9 million (US$20 million) and operating profit up fourfold to £693,000. The agency recently acquired Spaulding & Co in Thailand (its first acquisition since its float on the London exchange) and expects to make another announcement by year-end followed by one in the first quarter of 2005. Dery notes: "We talked about Thailand, Indonesia, South Korea, and then India as the second phase after we complete the Southeast Asia network first." China, however, is proving far trickier. While a Beijing office is on the cards, the agency's biggest challenge for now is migrating its project-led clients into long-term partners. "Short-termism is everywhere, but perhaps in less developed markets it's more pronounced. Once you really develop trust with the client it can change but this happens all the time and you have to work with it," says Saatchi. "There has been a lot of interest from Chinese companies who want to develop brands outside China so that's a long term sign of business and that's the type of thing that I think we can do very well in."